"The IT industry was extremely challenging throughout 2011," said XMA in a statement accompanying the financials.

"As noted in the prior year statutory accounts the company achieved great success from a number of government initiatives which were not continued in 2011," the company added.

Like-for-like sales - excluding those discontinued activities in the government space - showed the underlying business grew, the firm claimed.

The impact of disappearing public sector business was less marked on operating profits, which fell 7.8 per cent to £3.05m as XMA lopped ten per cent off admin expenses to £11.38m.

Net profits slid from £2.42m in calendar 2010 to £2.1m last year.

The firm also took a lot longer to turnover inventory, up to 17.24 days on average compared to 9.46 days in the previous financial year, and debt collection was also stretched to 36 days from 19 days in 2010.

The result was that cash surpluses started to erode, down to £771,000 from the £1.7m XMA had in the bank a year earlier. ®